Latest updates

Decision Implies Illegality of Leveraged Buy-Outs
  • South Korea
  • 20 December 2006

The Supreme Court has issued a landmark decision that will have a major negative impact on the Korean leveraged buy-out market. Overturning a lower court's decision, it held that the defendant had committed an occupational breach of trust under the Criminal Code when he utilized the acquired company's assets as collateral for borrowing to finance a leveraged buy-out transaction.

Proposed Amendments to the Commercial Code
  • South Korea
  • 27 September 2006

Spearheaded by the Ministry of Justice, the Korean government is working on comprehensive changes to the Commercial Code. One proposed amendment introduces a freeze-out provision, which will allow a company's largest shareholder to eliminate those minority shareholders which it believes may be troublesome.

Court Rules Out Sale of Treasury Shares as Management Defence Tactic
  • South Korea
  • 17 May 2006

The Seoul Southern District Court has rendered a decision prohibiting the exercise by the largest shareholder of voting rights attached to treasury shares purchased from Daelim Trading Co Ltd, holding that the sale of the treasury shares by Daelim was void.

Are Leveraged Buyouts Illegal?
  • South Korea
  • 27 July 2005

Although leveraged buyouts are one of the most common types of merger and acquisition worldwide, in Korea they are still viewed with scepticism by both the government and the business sector. However, a recent criminal case may have set an important precedent for determining the legality of leveraged buyouts.

Amendment of the 5% Rule
  • South Korea
  • 23 March 2005

The amended Korean Securities and Exchange Act will soon come into force. It expressly requires the filing of a report on the purpose of ownership in addition to the shareholding status where a party becomes the owner of 5% of the shares of a listed corporation. Harsher penalties for breach of the reporting obligations are also imposed.

New Reporting Requirement for Business Combinations
  • South Korea
  • 11 June 2003

The Korea Fair Trade Commission has changed its business combination reporting regulations by issuing Notification 2001-11, which requires foreign companies to report certain significant business combinations occurring between foreign companies outside Korea.

Successor Liability in Asset Acquisitions
  • South Korea
  • 28 May 2003

The scope of successor liability is a major factor to be considered when structuring a business acquisition transaction. It is recommended that a purchaser's exposure to successor liability be reduced through risk-shifting mechanisms in the acquisition documentation, such as tight and extensive seller's representations and warranties, and strong indemnities.

The Purchase and Sale of Financially Troubled Companies
  • South Korea
  • 03 July 2002

This update summarizes the rules that apply to mergers and acquisitions of financially troubled companies based on the practices of the Korean courts and the Practice Guidelines on Mergers and Acquisitions of Companies Under Court Protection promulgated on January 31 2000 (most recently amended on October 9 2001 by the Seoul District Court).

No Vanishing Act Allowed for Corporations with Negative Net Equity
  • South Korea
  • 23 January 2002

The Ministry of Court Administration of the Supreme Court of Korea has ruled that a corporation with negative net equity may not be the disappearing entity in a merger. The court's reasoning was based on the fact that such mergers violate one of the principles of the Korean Commercial Code.

Recent Amendments to the Korean Commercial Code
  • South Korea
  • 25 July 2001

In recent years several changes have been made to the Commercial Code. The changes are largely a result of the International Monetary Fund financial crisis of 1997, following which the government decided to modify the corporate governance structure to improve the transparency and responsiveness of company management towards minority shareholders.

Overview (November 2000)
  • South Korea
  • 29 November 2000

Including: Government Initiatives; Venture Business; Special Assistance and Exceptions; Variations from Basic Corporate Law; Tax Benefits; Pre-Initial Public Offering Financing; Venture Capitalists; Legal Instruments.

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